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Of Advanced Research in Engineering & Management (IJAREM)
ISSN: 2456-2033 || PP. 20-26

Literature Review on Customer Satisfaction

Dr. Ankur Saxena
(Technocrats Institute of Technology - MBA, Bhopal, India)

Abstract: Academic and corporate interest in customer satisfaction has risen considerably in recent
years. This can be seen by the number of papers published in the related field. To explore the field
further, the purpose of this paper is twofold. First, it offers a literature review on customer satisfaction
taking various papers published into account. Second, it offers a conceptual framework to summarize the
research in this field comprising three parts. As starting point related triggers are identified. This allows
putting forward three distinct strategies: customer satisfaction to create loyalty, Impact of service quality
on customer satisfaction and customer satisfaction and price tolerance. Concept of value addition through
innovation to create satisfaction is also covered by author.
Author has examined the body of relevant conceptual and empirical works in top management outlets, as
well as specialty outlets. It’s found that there is widespread consensus among satisfaction related
literature that satisfaction is an evaluative judgment and several comparison standards have been
proposed in the literature but no consensus exists concerning which standard best predicts customer
Both practitioners in companies and academics might find the review useful, as it outlines major lines of
research in the field. Further, it discusses specific features of customer satisfaction and develops a new
model; this should stimulate further research.
Key Words: Customer Satisfaction; Loyalty; Price Tolerance; Service Quality HFSS Software etc.

1. Introduction:
Customer satisfaction is an ambiguous, abstract and confusing concept. Customer satisfaction refers to
the extent to which customers are happy and delighted with the products and services provided by a business. In
other words satisfaction is the state of mind felt by a person who experienced a performance of product or
service that has fulfilled his or her expectations. Satisfaction is thus a combination of relative level of
expectations and perceived performance. Customer Satisfaction with a purchase depends on the product and
service real performance relative to customer expectations. A Customer might experience various degrees of
satisfaction, if A
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purchase, there are certain inbuilt expectations. Satisfaction results when those expectations are met. For
example, when a hungry employee goes to a restaurant for lunch, he could be having the following expectations:
Keywords (11Bold): About five key words in alphabetical order, separated by comma (10 Italic)
1. A meal of rice, bread and lentils (Dal) that will be tasty and filling.
2. Being served within ten minutes.
3. The meal costing not more than Rs. 100.

The basis on which these expectations may have been formed could be through old experience at other
restaurants. They could also have been formed owing to the promotional claims made by the restaurants. So,
whenever a customer calls up Domino’s Pizza they expect that the company will deliver the Pizza within 30
minutes. Some time expectation may also formed when peer group recommend certain product or services.

Kotler and Armstrong (2002); “Principles of Marketing”, Pearson Education Asia, Ninth, Edition, Page No.

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Of Advanced Research in Engineering & Management (IJAREM)
ISSN: 2456-2033 || PP. 20-26

However, customer satisfaction may be effected by factors that are not concerned with the core offering. In the
above example of the hungry worker going to a restaurant, the worker could still-not satisfy despite the
expectations mentioned below being met:
1. The waiter behaves very rudely with him/ misbehaves.
2. Number of Diptera converges on his plate while he is eating.
3. It takes the restaurant 10 minutes to prepare his bill.
Therefore, a customer doesn’t focus only on the core offering, but also other aspects concerned with the
total need fulfillment. For example, children frequently visiting McDonalds are satisfied not by the food offered
by McDonalds, but often because of the free gifts that accompany the meal. So, what is clear about customer
satisfaction is that customers are most likely to appreciate the goods and services that they buy if they are made
to feel special. Gaining high levels of customer satisfaction is important to a business because satisfied
customers will be loyal one and use a wide range of product and services offered by a business.

2. Defining Customer Satisfaction:

Despite extensive research in the years since Cardozo’s (1965)2, definitional considerations have
received little attention and researchers have yet to develop a universally accepted definition of consumer
satisfaction. As a result, the literature is replete with different conceptual and operational definitions of
consumer satisfaction. Below are the few conceptual definitions of Consumer Satisfaction:

Conceptual and Operational Definitions of Consumer Satisfaction
Literature Source Conceptual Definition Focus

Oliver 1997 The consumer's fulfillment response. It is a Product or service

judgment that a product or service feature, or
the product or service itself, provided (or is
providing) a pleasurable level of
consumption-related fulfillment, including
levels of under- or over-fulfillment (p. 13)

Halstead, Hartman, and A transaction-specific affective response Product performance

Schmidt 1994 resulting from the customer’s comparison of compared to some pre-
product performance to some pre-purchase purchase standard
standard (e.g., Hunt 1977; Oliver 1989) (p.

Mano and Oliver 1993 (Product satisfaction) is an attitude - like Product

post-consumption evaluative judgment (Hunt
1977) varying along the hedonic continuum
(Oliver 1989; Westbrook and Oliver 1991) (p.

Cardoza,R.(1965) “An Experimental Study of Customer Effort, Expectations and Satisfactions”, Journal of
Marketing Research 2, Page No. 245.

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Of Advanced Research in Engineering & Management (IJAREM)
ISSN: 2456-2033 || PP. 20-26

Fornell 1992 An overall post-purchase evaluation (p.11). Post-purchase

perceived product
performance compared
with pre-purchase
Oliver 1992 Examined whether satisfaction was an Product attributes
emotion. Concluded that satisfaction is a
summary attribute phenomenon coexisting
with other consumption emotions (p. 242).

Westbrook and Oliver A post-choice evaluative judgment Specific purchase

1991 concerning a specific purchase selection (Day selection
1984) (p. 84).

Source: Various books on "Consumer’s Satisfaction”, and various volumes of “Academic of Marketing
Science Review”.
On the basis of above mentioned (Table 1) we can analyze that some of the definitions provided in the
consumer satisfaction literature are fundamentally different with one another. In other cases, the definitions have
overlapping components but are partially different. When examined as a whole, for researcher “customer
satisfaction is a response occurs at a particular time and its result of a series of comparison of product
and service performance with expectations.” One can identify four general components from this definition:
1. Consumer satisfaction is a either emotional response or cognitive response;
2. The response occurs at a particular time (after consumption of product and service, after selection, based on
accumulated experience, etc);
3. The response occurs after a series of comparison and evaluation(Comparison with pre-purchase
4. The response is related with a particular central aspect (product, service, consumption experience, etc.).
However, purchase experiences are not isolated, they occur within specific contexts or environments. Cardoza
(1965) stated that “customer satisfaction may depend not only upon the product itself, but also upon the
experience surrounding acquisition of the product” 3. For example, customers at CCD are satisfied owing to the
experience that it offers, apart from the coffee.

3. Customer Satisfaction and Loyalty:

It’s a universally accepted fact that customer satisfaction and loyalty is intrinsically coupled to the
well-being and long term growth of the any company. Providing benefits above and beyond what the customer
is even aware of through innovation and proper value addition can create a loyal customer (See Saxena, 2014)4.
The literature pertaining to relationships among customer satisfaction, customer loyalty, and profitability has
two dimenstions: The first, service management literature, proposes that customer satisfaction influences
customer loyalty, which in turn affects profitability. Supporter of this theory include researchers such as
Gummesson (1993)5; Heskett et al. (1990)6; Heskett et al. (1994)7; Reicheld and Sasser (1990)8; and Zeithaml et

Cardoza,R.N. (1965) “An Experimental Study of Customer Effort,Expectations and Satisfactions”,Journal of
Marketing Research 2, Page No. 249.
Saxena,A.(2014) “A Comparative Study of Customer Satisfaction of CDMA Mobile Services (With Special
Reference to Reliance and Tata Telecommunication)”; Ph.D. Research Work, BU Bhopal, Page No. 177.
Gummesson, E. (1993), Quality Management in Service Organizations: An Interpretation of the Service
Quality Phenomenon and a Synthesis of International Research, International Service Quality Association,
Karlstad, Sweden.
Heskett, J.L., Sasser, W.E. and Hart, C.W.L. (1990), Breakthrough Service, The Free Press, New York, NY.

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Of Advanced Research in Engineering & Management (IJAREM)
ISSN: 2456-2033 || PP. 20-26

al. (1990)9. These researchers discuss the links between satisfaction, loyalty, and profitability. Nelson et al.
(1992), who demonstrated the relationship of customer satisfaction to profitability among hospitals, and Rust
and Zahorik (1991), who examine the relationship of customer satisfaction to customer retention in retail
banking also examined these interlinkages. The Bank Administration Institute has also examined and evaluate
these ideas, in particular Roth and van der Velde (1990, 1991)10.
The service management literature argues that customer satisfaction is the result of a customer’s
perception of the value received in a transaction or relationship – where value equals perceived service quality
relative to price and customer acquisition costs (see Blanchard and Galloway, 1994; Heskett et al., 1990) –
relative to the value expected from transactions or relationships with competing vendors (Zeithaml et al., 1990).
Loyalty behaviors, including relationship continuance, increased scale or scope of relationship, and
recommendation (word of mouth advertising) result from customers’ beliefs that the quantity of value received
from one supplier is greater than that available from other suppliers. Loyalty, in one or more of the forms noted
above, creates increased profit through enhanced revenues, reduced costs to acquire customers, lower customer-
price sensitivity, and decreased costs to serve customers familiar with a firm’s service delivery system (see
Reicheld and Sasser, 1990).
The second relevant literature is found in the marketing domain. It discusses the impact of customer
satisfaction on customer loyalty. Yi’s concludes, “Many studies found that customer satisfaction influences
purchase intentions as well as post-purchase attitude” (p.105)11.
The marketing literature suggests that customer loyalty can be defined in two distinct ways (Jacoby and
Kyner, 1973)12. The first defines loyalty as an attitude. Different feelings create an individual’s overall
attachment to a product, service, or organization13. These feelings define the individual’s (purely cognitive)
degree of loyalty.- S. Fornier (1994)
The second definition of loyalty is behavioral. The behavioural view of loyalty is similar to loyalty as
defined in the service management literature. This study examines behavioural, rather than attitudinal, loyalty
(such as intent to repurchase). Examples of loyalty behavior include continuing to purchase services from the
same supplier, increasing the scale and or scope of a relationship, or the act of recommendation (Yi, 1990) 14.
This approach is intended, first, to include behavioural loyalty in the conceptualization of customer loyalty that
has been linked to customer satisfaction and second, to make the demonstrated satisfaction/loyalty relationship
immediately accessible to managers interested in customer behaviors linked to firm performance.
Both the service management and the marketing literatures suggest that there is a strong theoretical
underpinning for an empirical exploration of the linkages among customer satisfaction, customer loyalty.

Heskett, J.L., Jones, T.O., Loveman, G.W., Sasser, W.E. Jr and Schlesinger, L.A. (1994), “Putting the Service
Profit Chain To Work”, Harvard Business Review, March-April, Page No. 105.
Reicheld, F.F. and Sasser, W.E. Jr (1990), “Zero Defections Comes to Services”, Harvard Business Review,
September-October, Page No. 107.
Zeithaml, V., Parasuraman, A. and Berry, L.L. (1990), Delivering Quality Service, The Free Press, New York,
Roth, A. and van der Velde M. (1991), “Customer Perceived Quality Drives Retail Banking in the 1990s”,
Bank Management, November, Page No. 29.

Yi, Y. (1990), “A Critical Review of Consumer Satisfaction”, in Zeithaml, V. (Ed.), Review of Marketing,
1990, American Marketing Association, Chicago, IL, Page No. 68.
Jacoby, J. and Kyner, D.B. (1973), “Brand loyalty vs. repeat purchasing behaviour”, Journal of Marketing
Research, February, Page No. 1-9.
Fornier, S. (1994), A Consumer-based Relationship Framework for Strategic Brand Management, published
PhD dissertation, University of Florida.
Yi, Y. (1990), “A critical review of consumer satisfaction”, in Zeithaml, V. (Ed.), Review of Marketing, 1990,
American Marketing Association, Chicago, IL, Page No. 68-123.

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Of Advanced Research in Engineering & Management (IJAREM)
ISSN: 2456-2033 || PP. 20-26

In 2010, A survey of nearly 200 senior marketing managers also establishes the relationship between
customer satisfaction and loyalty, 71% responded that they found a customer satisfaction metric very useful in
managing and monitoring their businesses15. Unsatisfied customers are not loyal customers, thus customer
satisfaction is seen as a key performance indicator within business.
Author has observed that Customer satisfaction has a significantly positive direct impact on customer
loyalty. Thus, as the level of customer satisfaction increases, the level of customer loyalty increases. Customer
satisfaction inversely influences customer complaints. Thus, as the level of customer satisfaction increases, the
level of customer complaints decreases. Customer complaints have significantly inverse impact on customer
loyalty. Thus, as the level of customer complaints increases, the level of customer loyalty decreases.

4. Service Quality:
Quality is an ambiguous and indistinct construct. The quality of a product or services can be its ability
to ensure complete customer satisfaction and will depend upon the use of a product or service. According to
Gronroos Service quality is the result of an evaluation process of a circumstance in which customer compares
their perceptions of service delivery and its outcome against what they expect.
It might possible that a customer can not define quality but definitely he/she can understand and
recognize quality and when a customer understand quality; it is reflected in customer satisfaction. In the web
environment, the web (user interface) can be identified as a service and user as customer of service. They brows,
or surf the internet, access, retrieve, save and share information; interact with other over the internet; order
product, service or trade stock and obtain entertainment. The quality of this service plays a greater role than the
quality of service to customer in other sectors, such as transport or hotels, or the customer service of a mobile
Firstly, customers of traditional service usually experience the service quality after they have
committed to the organizations. In the case of the telecommunication there is very less interaction between
customer and service provider; since there is no face to face human interaction in the environment, and service
adjustments based on verbal and non verbal cues are not evidence. Thus the design of the telecom services is
crucial importance in delivering service and satisfying customers. According to Ishikwa, fulfillment of quality
elements like Selling point and characteristics of product such as ease of use and excellence design that makes it
superior to the other company offerings, provides positive customer satisfaction.
Delivering quality to customer in a competitive marketplace like in telecom industry dictates the need
to continually enhance a customer’s experience and satisfaction. According to Schneider and Bowen (1999),
simply most customers’ range from being moderately dissatisfied to moderately satisfied. Satisfaction can be
considered at two levels: the transaction or encounter level and overall complete satisfaction (Bitner and
Hubbert, 1994).
Thus, Quality appears to be only one of the service factors contributing to the customer's satisfaction
judgments (Cronin and Taylor, 1992). Spreng and Mackoy (1996), who test a modified version of a model
proposed by Oliver (1993) that sought to integrate the satisfaction and service quality literature, also provide
support for service quality as being an precedent to satisfaction. More recently, this relationship has also been
accepted from a study in a health-care setting by Deruyter et al. (1997), who also show that service quality
should be treated as an precedent of service satisfaction. Iacobucci et al. (1995) says that the key difference
between service quality and customer satisfaction is that quality which relates to standard and delivery of the
service while satisfaction reflects customer’s expectation with that service. They argue that quality
improvements that are not based on customer needs will not lead to improved customer satisfaction.

5. Price Fairness:
Price is the amount of money charged for a product or service, or the sum of the values that customers
exchange for the benefits of having or using the product or service; or price is the amount of money or goods
needed to acquire some combination of another goods and its companying services. Price fairness refers to
consumers’ assessments of whether a seller’s price is fair or justifiable (Xia et al., 2004; Kukar-Kinney, Xia and
Monroe, 2007). Price fairness is a very important issue that leads toward satisfaction. Charging reasonable price

Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The
Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education,
Inc. ISBN 0-13-705829-2.

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Of Advanced Research in Engineering & Management (IJAREM)
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helps to develop customer satisfaction and loyalty. It was found that customer satisfaction is directly influenced
by price perceptions of customer while indirectly through the perception of price fairness. The price fairness
itself has a great impact on satisfaction.

6. Proposed Model: Expectation-Value Addition-Satisfaction Matrix:

On the bases of this study researcher is proposing a new model who explains the relationship between
expectation, value addition and satisfaction. Expectation-value addition-satisfaction matrix relates Customer’s
expectation, his/her expression of expectation and value addition with satisfaction level of customer. It is
schematically represented in Diagram. This matrix is divided into four cells, as shown in the diagram below:
Diagram 1
Expectation-Value Addition-Satisfaction Matrix

The chart indicates that when the expectations of customers are high and met through some value
addition in products or services customer will become loyal customers and when there is low value addition in
products or services delivered to customers who have low expectations, customer will be just satisfied and will
not be a advocate of the company or in simple word will not be loyal for the company. Quality strategy should
hence be to provide value additions that are not expected by the customers. In such cases incremental
unexpected/ expected value addition will bring in immense satisfaction to the customers.

7. Implications for Further Research:

Consumer satisfaction researchers consider a consensual definition to be a priority in furthering
consumer satisfaction theory. This research work is important for three reasons:
 It develops the understanding of the concept of customer satisfaction;
 EVS model helps organization in satisfying their customers; and,
 Our proposed definition framework allows researchers to identify the common and unique
components of different satisfaction studies. This will allow results to be more easily
interpreted and compared.

8. Conclusion:
As a conclusion, Author can say that a business should serve its customers. People are the most
important asset for a business. Organization can manage only what they measure so it’s important to measure
the level of customer satisfaction statistically. Treat the others as you would like to be treated and served. Profit

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Of Advanced Research in Engineering & Management (IJAREM)
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is important but for long term growth and profit customer satisfaction is everything. Loyalty is not a strategy
decided by the strategic department of organization, loyalty is a promise, culture made by the all level of the
organization, firm should focus on the creation of superior value by innovations. By developing a satisfaction-
loyalty based management system, organization can earn profit, growth, and lasting value.

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[12]. Saxena, A.; “Customer Satisfaction: A Complex Phenomena”, Journal of Business Analysis. Vol.4 Dec
2014, pp 47-54.

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